Is Alabama the Perfect Proving Ground for New Government and Utility Payment Tech?
Payment technology has evolved significantly in recent decades: in addition to cash, Americans now have the option of paying their bills with checks, credit and debit cards, digital wallets, and even digital currencies. Under the right circumstances, it’s possible today to pay a utility bill with a smartphone connected to a digital wallet – without ever touching a paper bill.
But to those of us in govtech and fintech, one of the most interesting questions isn’t about what today’s technology makes possible for early adopters, but rather how we can apply the technology we have to make payment processes better for everyone involved – especially for essential services like utilities.
And for those of us looking to answer that question by testing new payment tech solutions, one of the most interesting places in the country is Alabama. The state boasts significant rural and urban populations, which means we can test the technology in varied and diverse settings. It also has a higher percentage of un- and underbanked residents than the nation as a whole (nearly 37 percent in AL vs. 27 percent in the US), which means its residents could see real benefits from payment technology like kiosks.
Bill Pay Infrastructure That Works for Everyone
When utility companies offer convenient payment options, everyone wins: customers are more likely to pay their bills on time and avoid service interruptions, and utility providers receive a steady stream of revenue. The challenge we’ve been working on with our partners in Alabama is how we can create a convenient payment option for customers who are un- or underbanked. These customers face four major hurdles in paying their utility bills:
Accessibility: Instead of paying bills online or by mail via card or check, un- and underbanked customers must go to a physical location to pay in cash.
Cost: For people who pay bills in person at a payment center, they must pay to travel to those centers (gas or bus fare). If they can only pay during business hours, they may also have to pay for childcare or take time off work. If someone without a bank account wants to make all their utility payments in one place, they may have to involve a check-cashing store. These venues charge a fee for cash payments.
Trust: In addition to that fee, the UX of check-cashing stores isn’t great. They don’t have account information for utility customers. Because of that, they can’t answer customer questions or help them look up their account number if they left the bill at home.
- Time: Whether a customer is visiting a single check-cashing store or several utility payment centers, they have to take time out of their day to get to the location and drop off their payments. For rural customers, the distance and time it takes to commute between payment centers can be substantial.
Introducing payment kiosks can solve some of these problems: 24-hour outdoor kiosks mean customers can pay bills in cash as their schedule allows. We’ve seen big adoption rates when we introduce 24/7 outdoor kiosks, demonstrating that people will overwhelmingly choose to pay during off hours when the option is available. One Alabama utility provider we work with sees 26% of its kiosk transactions made after business hours on a 24/7 kiosk. But as we’ve discussed in previous posts, it doesn’t matter that you can pay your water bill late at night if you still have to take time off to pay your electricity and gas bills.
That’s why a solution that lets customers pay bills from multiple utility providers and government agencies at a single kiosk makes life better for everyone:
A single, 24-hour kiosk location means customers can make just one trip to pay their utility bills every month. This means less time in transit, less gas money (for rural customers), and no need to take time off work – in other words, a reduction in the burden created by paying utility bills.
When the most convenient payment option is operated by a utility provider or local government, there’s no middleman in the transaction. This means customers can make cash transactions without paying fees.
Shared hardware means service providers can save money on technology: providers that make their payment application available on a shared kiosk only need to invest in that payment solution that runs on the kiosk, rather than paying for the kiosk itself.
More convenient bill-pay options for customers will likely increase on-time payments, which means steadier revenue for service providers.
The technology allows providers and agencies to collect funds in one place without commingling those funds, therefore greatly reducing the liability associated with the shared infrastructure.
Looking to Alabama to Make It Work
Given the potential impact shared kiosks can have on the lives of its residents, Alabama is eager to pioneer this technology. It’s also well positioned to implement the new payment option immediately, thanks to various existing traits:
- A need among residents/utility customers: As we mentioned above, Alabama has a higher rate of unbanked and underbanked residents than the country overall, meaning there is a clear need for the convenience to cash-payers that a multiple-utility payment kiosk would provide.
- A diverse population: In addition to major cities and rural areas, Alabama has college towns, beach towns, and suburbs, making it a kind of “little America.” Cities and utility providers can develop proofs of concept in the state that can be applied to communities around the country.
- Willingness among utility providers to try something new: We’re already working with Alabama utility providers that are enthusiastic about being able to share technology. This improves the options available to customers across the state, and it means we can launch sooner, learn faster, and continue improving.
- Kiosk technology already in place: This is a bonus. We have current customers in Alabama who have seen substantial cost savings from implementing self-service, in-person payment technology. Their enthusiasm for the project has helped other utility providers see the probable upsides.
For payment technology to be truly transformative, it must offer innovative options for all people, including those who do not have access to traditional banking systems. Innovative uses for existing, readily accessible payment technology like kiosks have this transformation potential: they make payments more convenient and less expensive for everyone.
Also published on Medium.